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Sales of structured investment products set to increase in 2009, says Barclays Wealth

23 March 2009 / by Rachel Mason

Three quarters of Independent Financial Advisers expect their use of structured investment products to increase this year, according to Barclays Wealth.

In a survey of more than 240 advisers, 73 per cent said they expected to increase the amount they use structured investment products in 2009, with 27 per cent saying they expected to increase their use "substantially."

Structured investment products are customized investments where investors can take a risk-adjusted exposure to conventional assets, or diversify their portfolios by investing in assets that are otherwise difficult to access.

Structured investment products offer set returns while either partially or fully protecting the capital investment.

Barclays Wealth has found that IFAs expect structured investment products with fixed returns and capital protection to be the most popular, products offering a geared return with a predefined maximum to be the nest most popular.

The third most popular structured investment product is predicted to be those offering a set minimum return with the potential for an additional bonus.

The survey also revealed that, in the current financial climate, where interest rates on savings accounts are so low, 52 per cent of IFAs believe that investors are generally willing to take on more risk to achieve above-average rates of income.

"Sales of structured products have been very strong for many months now and that looks set to continue with the vast majority of advisers expecting to increase their usage of protected investments this year," explained Colin Dickie, a director at Barclays Wealth.

Mr Dickie says that ongoing market uncertainty is "clearly a key driver" as advisers are looking for ways to improve their clients' potential returns, but that at the same time, they are very aware the losses that they are ptjer IFAs they have suffered in the past year or so, and are therefore keen to build protection into their portfolios.

"Products offering a fixed return are the clear favourite here and that has very much been our experience in the past eight months," he explained, "with sales of our Defined Returns and Annual Kick-Out plans exceeding anything we have experienced before."